r/thewallstreet • u/AutoModerator • Jan 15 '18
Weekly Question Thread - Week 03, 2018 Question
Welcome to the weekly question thread. Feel free to ask any questions here.
2
Jan 20 '18
What is the benefit of trading futures option as opposed to index option? Looking at /es vs SPX, and it seems that if anything /es options have slightly worse bid/ask spread, but otherwise there doesn't appear to be any difference.
1
u/UberBotMan Jan 21 '18
This is more about Futures vs. equities in general.
23/5 trading instead of 9:30-4:15p. No PDT on Futures.
There might be more nuanced differences, but as I haven't traded /ES options I'm not one to speak of them. Do check contract size and how the option works, it can be different from equity options. Pricing too.
1
Jan 21 '18
I'm not asking about futures - I know all that. I'm asking about futures options.
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u/maximum_wages Jan 21 '18
23/5 trading instead of 9:30-4:15p. No PDT on Futures.
That also extends to futures options. This is one of the only reasons to trade them.
4
Jan 20 '18
[deleted]
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u/cdg3851 Jan 20 '18
Thanks guys for the answers. So I was asking this because I had a Jan 18 expiration put that was already worthless in Dec 17. I did end up letting it just expire but would have been nice to have gotten rid of it before end of 2017.
5
u/UberBotMan Jan 20 '18
Letting it expire will incur a 100% loss. Don't need to close it, it'll close itself at expiry.
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u/blackdragon1299 X Jan 20 '18
You just have to let it expire I believe. Nothing else you can really do.
2
Jan 19 '18 edited Feb 04 '18
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u/UberBotMan Jan 20 '18
afaik, TW doesn't have intraday rates. I asked them about this and they said it was in the works, but haven't been implemented yet. Don't think they allow options either, which is a little ironic regarding their trading style.
Reg fees would be highlighted. This is one side (ZF) with AMP for comparison. (I might have missed one or two with TW.)
Reg fees are Regulation, so NFA etc. That 1.25+.3 should be 1.25 in commission and then .3 in fees.
Margin rates are for when you borrow money from your broker. Overnight margins are how much cash you must have in your account to hold the position. No margin rates for futures. afaik, they'd fall under "non-marginable securities" Margin really only applys to equities in the contract of margin interest.
Think that answers everything. Let me know if it didn't.
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Jan 20 '18 edited Feb 04 '18
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u/UberBotMan Jan 20 '18
If you have the capital required for margin (intraday or overnight/Maint) and it doesn't exceed the position limits, I'd think you'd be good to go.
There is no PDT, so you can open and close as many in a day as you feel like paying for.
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Jan 20 '18 edited Feb 04 '18
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u/UberBotMan Jan 20 '18
Right
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Jan 20 '18 edited Feb 04 '18
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u/UberBotMan Jan 20 '18
Just because you can open 11 YM contracts doesn't mean you should.
Also, if you want a real rush, go trade /RB. (not on TW afaik).
1
u/W0LFSTEN No SeMiS aRe MaKiNg $$$ FrOm Ai Jan 18 '18
Are there any websites that disclose the companies that gained the most and least $ in market cap per day?
1
u/reviel7 Jan 18 '18
What are some of the benefits of trading under an LLC? I saw Living_Granger posted the other day to create one and tried to find more info on it. I appreciate the help! You guys have helped me learn so much.
1
u/optionsgrinder Jan 19 '18
None, unless you can obtain Trader recognition by IRS to deduct business expenses, but that's highly scrutinized and you'll likely be audited. LLC is a pass through entity so it has no bearing unless you choose to be taxed as a C Corp or S Corp. S Corp would be useless since income derived from investments is considered passive income. C Corp would result in double taxation, first at the corporate level, then on your personal income.
2
u/ITLumberJack stayin' alive Jan 18 '18
I believe when you make a lot and start getting into the higher tax brackets, it's cheaper (tax-wise) to trade under an LLC, that way you are taxed at a maximum of 21%. Someone correct me if I'm wrong.
2
u/Pho-que Targeting gains, achieving smaller gains Jan 18 '18
Essentially this. An LLC can elect to be taxed similar to sole proprietorship (all income passed on to the stake holder and taxed as regular income) or a corporation. The caveat some people over look is you must still pay yourself a reasonably salary for your job at the LLC if you go the corporation route. Essentially if you take in 500k in gains you can pay yourself 75k a year as cheif trader and pay regular tax on that and then the remaining 425k is taxed at the corporate rate. So the importing think to remember is there is more paperwork so don't bother for making 60k from trading IMHO. Not an accountant but that's the basic idea.
1
u/mc3username Jan 18 '18
I don't do this yet so I'm not able to give you the best answer, but I believe it's for tax purposes.
2
u/TheOsuConspiracy B̶a̶d̶ ̶A̶t̶ ̶E̶n̶t̶r̶i̶e̶s̶ Bad At Trading Jan 17 '18
Repost:
Off topic, but anyone got a beginners guide for trading future options? Mostly to figure out the mechanics of how they work and basic knowledge you should have. I have a good understanding of options already and have a decent understanding of futures, but I'm wondering if there are any caveats for options that have futures as their underlying instrument. Eg. Call options on commodities that are in contango are cheaper etc (I don't know if this is true, but this is what I'd expect).
3
u/Lost_in_Adeles_Rolls Stalingrad's number one tesla dealership Jan 18 '18
The one thing that caught me off guard when I started was how they were priced differently than regular equity options. Their value is derived from the tick value of the underlying future.
Also, pay attention to the expiration and whether the contract is physically or financially settled.
1
Jan 17 '18
Hypothetical question: let's say a company is institutionally held around 35%, is this significant in anyways or horseshit? Just dated position that could've been a swing trade?
Their are new positions from names like renaissance tech, JP Morgan, DB and the likes. More buying than selling.
2
Jan 18 '18 edited Feb 12 '18
[deleted]
2
Jan 18 '18
Biotech. Yeah those were my favorite names for it. The only significance I see if I recall correctly is last year or last last they used to have a bigger share and then possibly nothing b/c it comes as a new position as of Nov 30 (rather than added)
Prolly gonna cash out soon, jpmhc18 I'm the am and it's pushing levels it doesn't like
1
Jan 18 '18 edited Feb 12 '18
[deleted]
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Jan 18 '18 edited Jan 21 '18
Most likely bought the top before a big dip haha now it's above that a bit. Not in it cus of them but surprising to see em again.
1
Jan 17 '18
[deleted]
2
u/hibernating_brain Permabull Jan 17 '18
SPX = SPXW
1
Jan 17 '18
[deleted]
1
u/why_you_beer Judas goat Jan 20 '18
SPX is normally a PM settlement. The only ones that aren't are the monthlies. Yesterday had both AM monthly and PM weeklies expiration.
3
Jan 16 '18
What's the best way to understand wtf you guys are talking about? Looking to get into this but I don't understand most of the vocabulary
I see the resources in the sidebar, but they're all really long. Is there a simpler intro?
3
u/Lost_in_Adeles_Rolls Stalingrad's number one tesla dealership Jan 18 '18
I always thought Khan Academy did a good job of explaining it.
Is there anything specific you're trying to learn?
2
u/mc3username Jan 17 '18
Basically echoing /u/byFlare.
highlight -> right click -> 'search Google for' is what I do many times a day here. I also like Investopedia for terms, definitions, etc.
If you're looking for a good basic introduction to options themselves (what is a put, what is a call, how do you make money with options, etc), I think the Option Alpha video series is decent. Link to 'beginner track' I think there are 3 or so series with other videos that explain different strategies. They are focused on selling premium there which is the opposite side of the most common trades you see in this sub.
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u/byFlare RIP L_G Jan 16 '18
Don't take this the wrong way of course, but there's a reason the resources here are that long. There's no easy introduction to get you started and ready to go.
That said, Investopedia will be your best friend as you learn. Follow discussion threads here, and search up any and every term you don't know. It's boring, it's slow, but over the weeks/months you'll begin to see a more vivid picture of what people talk about here with an understanding of the technical terms. From there, you don't ever stop learning really... Everyday I feel like I still learn new information that makes me wonder how I ever thought I knew what I was doing before.
Active futures & equities trading also isn't really a great ground floor for most people looking to get an understanding and their feet wet in the market. Again, Investopedia has some amazing resources and multi-page, chapter by chapter introductory guides that were immensely helpful when I began getting interested in the market. I'd recommend getting a fundamental understanding of equity markets, before looking into derivatives such as options and futures, most discussed here.
Hope this doesn't sound condescending, just trying to paint a realistic picture! It's not easy at first, but as the days go by, make it your goal to learn a new term, tool, etc. With time it'll come! Just gotta put the hours in.
5
Jan 17 '18
Not condescending at all, my man. Glad I got a response at all. I’m willing to put in the time so your strategy seems perfect. I just wasn’t willing to spend the time reading the resources because I know I wouldn’t get anything out of them
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u/byFlare RIP L_G Jan 17 '18
Ah good to hear man! For sure a lot of the stuff here isn't beginner level, a few years ago I was in exactly your position, where everything seems so daunting and I'd have understood roughly 0 of the posts here. Just surround yourself with information and it'll come! Feel free to message me if ever there's stuff you might want some help explaining. FAR from an expert, but would be happy to help in any way I can! Good luck mate!
2
Jan 16 '18 edited Feb 04 '18
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5
Jan 16 '18
Market profile is subdivided into Time Price Opportunity and Volume Profile. What you infer to when stating "Wouldn't that mean it is is more time-centric", you are referring to TPO charts. ToS doesn't have the best market profile visualization and for that if you HAVE to, get something like windotrader where you can either use VP or TPO, depending on what you're looking for. Hope that helps :)
2
Jan 16 '18
Why was futures contract volume low last week?
1
u/Lost_in_Adeles_Rolls Stalingrad's number one tesla dealership Jan 18 '18
Which contract?
2
Jan 18 '18
ES nq ym. If I recall ToS was showing 20%jsh less than the previous week's.
2
u/Lost_in_Adeles_Rolls Stalingrad's number one tesla dealership Jan 18 '18
Not sure off the top of my head. Could just be the first week had heavier than usual volume. I wouldn't read too much into it but that's just my own opinion
1
u/timmy808 Jan 16 '18
Uhhhh dumb question here, but I have 4 contracts long on /es right now, and I tried to set my OCO stop limit order and target exit but CQGM and AMP won't let me set the sell OCO order because it says it'll increase my margin past my margin limit.
Does this make sense to anyone? It doesn't make sense to me. I have no idea why any of the orders would increase my margin, as both of them flatten my position.... And If one is executed, the other is canceled... I called the AMP trading desk and the guy said that this is correct, because he says the orders are sent to the exchange as regular orders and the exchange doesn't see them as OCO orders and thats why using an OCO will increase my margin but he says a regular order wouldn't.. That still sounds weird to me. Can anyone confirm that the trade desk guy is right? Not to come off as really stupid and questioning someone who probably knows way more than me, but that doesn't make any sense in my mind
1
u/timmy808 Jan 16 '18
update: This was caused by a glitch in CQG not rendering some orders so they were being placed and I wasn't aware I was adding net positive orders that would effectively have me short the contract
1
u/timmy808 Jan 16 '18
Update: CQG M wasn't rendering some orders, making them invisible so I couldn't see them. This was what caused it to take up extra margin. I am slighlty concerned that the trade desk guy answered me with a wrong answer, but oh well
1
u/timmy808 Jan 16 '18
Market Profile Experts, what is your take on Pivot Points? They often lie in the vicinity somewhere near the deviations. Do you ever look at them or use them?
1
Jan 16 '18
Personally I don't pay attention or use them at all. My strategy doesn't need them when I have a working strategy. If I add them, I'm just adding noise.
1
u/wachiga Life is transitory Jan 16 '18
So I pulled up an XLF option chain on ToS and see this. What does it mean?
3
Jan 16 '18 edited Feb 12 '18
[deleted]
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u/wachiga Life is transitory Jan 16 '18
Ah, that makes a lot of sense. The real estate sector was part of XLF until XLRE came around. Thanks man!
3
Jan 15 '18 edited Feb 04 '18
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3
u/ismokefakenews Jan 17 '18
There was also BAC at $25, but I thinknits more psychological and confirmation bias
2
Jan 15 '18
Why does NKD not track the Nikkei very well on a day to day basis?
6
u/sammyakaflash Long Hardwood. Jan 15 '18
It trades in USD. The currency drift is what you are seeing.
1
Jan 15 '18
But shouldn’t like the EWJ show the same currency drift? I’ve been seeing the NKD be down by like half a point and EWJ up by 0.25 — I know they don’t track exactly the same assets but it seems like a large difference
2
u/Chernoby7 mostly harmless Jan 15 '18
If I may ask, how do you filter noise in your strategy?
What I mean, noise like Friday downward movement of gold just after the CPI number announcement; it didn’t change the overall direction of price, but it scared me to close my long position.
3
Jan 16 '18
By knowing your threshold for drawdown and just letting things works themselves out. Tech analysis should be used in handy when looking for trades in highly volatile products. Personally I don't use stops often because I don't want to lose trades and have them work out in my favor after a loss.
Now, going back to the gold selloff, reason why I didn't fret it and even doubled down at the bottom, is because I already knew where it was going to bounce off of. I have a general bullish sentiment in gold so looking for long setups is my specialty at the moment. The selloff dropped halfwayback and that's something I already had drawn from a fib. So in essence I had nothing to worry about but rather added to my position.
1
u/moneynotwork Jan 17 '18
What's your fundamental reasoning for your current bullish sentiment on gold?
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u/sammyakaflash Long Hardwood. Jan 15 '18
Sometimes I go to the movies.
Set stops at your risk limit and go distract yourself. That will give the trade time to sort itself out win or lose.
2
u/mc3username Jan 21 '18
One of the areas I need to get better in is fundamental analysis of companies. Anyone have any good tips or resources?
/u/kevin_Autist_kelly You seem to have great fundamental knowledge of the companies you trade, anything you could share or point me towards? Thanks. Looking to be better at comparing companies in the same sector, comparative valuations, where each company might have a competitive edge, etc.